Pound US Dollar Exchange Rate News: GBP/USD Soared Despite Sweeping UK Industrial Action

December 28, 2022 - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Soared Despite Sweeping UK Industrial Action

Pound (GBP) Strengthened Despite Overwhelming Strike Action

The Pound (GBP) strengthened considerably against the US Dollar on Wednesday, despite sweeping industrial action weighing on the UK economy.

Border Force have resumed strike action along with railway workers after the festive period. Travel delays are to be expected as passport control workers will be replaced by military personnel and civil servants. With disputes over pay and working conditions causing friction between workers and firms, a spokesperson for Downing Street has claimed that double-digit wage rises would be disastrous for the economy. The spokesperson added:

‘We want the strikes to come to an end, we want people to agree a fair pay settlement but, as we’ve said before, what we can’t do is allow for double-digit pay rises that will embed inflation going forward, which will impact the amount of money people have going forward.’

Civil servants have been drafted in to assist military personnel in passport control at six UK airports, including Manchester, Heathrow, and Gatwick. Rail strikes in the Midlands have piled more pressure on those returning to work or are still travelling for the Christmas period. With pressure building on the government to step in and resolve these issues, Prime Minister Rishi Sunak has reaffirmed the government’s position in tackling inflation. Sunak said:

‘Part of that is being responsible when it comes to setting public sector pay. In the long term, it’s the right thing for the whole country that we beat inflation.’

US Dollar (USD) Stuttering amid Choppy Trading Conditions

Meanwhile, the US Dollar (USD) was left vulnerable to the turbulent market mood, as a lack of major data saw the ‘Greenback’ trade on risk sentiment. Earlier in the session, the US Dollar found strength as investors became concerned with the news out of China.

Despite a radical step down from its strict zero-Covid policy, a relentless surge of infections has seen the healthcare system come under intense pressure. Both hospitals and funeral homes were strained as Covid infections sapped resources. A funeral worker at the Dongjiao funeral home, one of the biggest in the region of Chengdu, reports that funeral processions were constant. They added:

‘We have to do this about 200 times a day now. We are so busy we don’t even have time to eat. This has been the case since the opening up. Before it was around 30-50 a day.’

With the worrying headlines out of China, the global market sentiment soured on concerns over another economic slowdown in the world’s second largest economy. The US have since warned that new travel restrictions could be introduced to those travelling from China.

With a lack of economic data, the US Dollar could see wild fluctuations until after the new year.

GBP/USD Exchange Rate Forecast: US Labour Market Data to Sink Greenback Further?

Looking ahead, and the Pound US Dollar exchange rate could see increased movement with the release of labour market data. Initial jobless data will further highlight the cooling labour market as an expected rise in unemployment could see the ‘Greenback’ slide.

Meanwhile, a quiet trading calendar could leave Sterling exposed to domestic woes. Prolonged industrial action threatens to further derail the UK economy, keeping a firm lid on meaningful gains for the Pound.

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